Employment Compliance under The Fair Labor Standards Act
Today, I'm happy to post a guest column from Allen D. Arnold of Arendall & Arnold, an employment compliance firm based in Birmingham, Alabama. He's going to address one of the questions I get asked most often: "When am I required to start taking employment compliance seriously?"
Paying Employees Properly
As your business grows both in terms of revenue and employees on the payroll, your business’ legal duties owed to those employees also grow. Most people know that when hourly employees work more than forty hours in a work week, the hours over forty are paid at one and one-half times the employee’s regular rate. But when does that take effect? Can you pay certain employees a salary instead in order to control my business’ costs? What records should you keep? The time to consult legal counsel about Wage & Hour Compliance can occur based on a single triggering event.
When do you need to start paying your hourly employees overtime premium compensation?
Once your business earns $500,000 or more in revenue, your business is covered by the FLSA and due to pay overtime compensation to the employees.
This financial threshold is on a rolling quarterly basis! This means if you have a bad quarter and fall below the $500,000 threshold for your business’ previous four quarters, there is the potential to forgo overtime premium payments for the next fiscal quarter. Once you have assessed your business’ revenue stream, it might be time to consult counsel about FLSA compliance and see if you can temporarily reduce your labor costs.
Depending on your business’ industry, several legal exemptions may be available to allow for the avoidance of having to pay overtime compensation. For example, a business employing computer programmers and software engineers has numerous regulations to provide it with legal protection to avoid overtime compensation payments, but certain tests and practices must be consistently adhered too in order to avail the business of such protection.
Additionally, depending on the responsibilities that you delegate to your employees, you may be able to place these employees on a salary instead of paying overtime compensation.
Whether your employees are exempt or non-exempt for overtime compensation under the FLSA, a business has a duty to maintain certain records that aren’t necessarily kept by your payroll processing company.
What other employment laws do I have to comply with?
There are other triggering events that require additional legal compliance. The chart below is a shorthand guide to assist your business on when to seek out legal counsel. In regard to employer/employee legal duties, being proactive is always better than being reactive!
|Alabama Workers Compensation Act||5 or more employees triggers liability, but if possible always carry insurance coverage for workplace accidents|
|Fair Labor Standards Act (FLSA)||$500,000 or more in revenue|
|Title VII of the Civil Rights Act of 1964 (Title VII)||15 or more employees on the payroll|
|Amended Americans with Disabilities Act (AADA)||15 or more employees on the payroll|
|Age Discrimination in Employment Act (ADEA)||20 or more employees on the payroll|
|Family and Medical Leave Act (FMLA)||50 or more employees on the payroll|
Once a business goes over the above thresholds even a single time, it’s time to look into compliance. This post is intended to help you better manage your growing business, but do not rely on this list exclusively, because laws change from time to time and location to location. If we can assist you with any of your employer/employee relationship needs, please contact us at
2018 Morris Avenue
Birmingham, AL 35203
***This post is accurate at the time of publishing, but laws change from time to time. A blog post is never a substitute to personalized legal counsel, so don't take the risk.***